05Jun16

Greed, Corruption and Danger: A Tarnished Afghan Gem Trade

The local people called the militia's takeover of the giant lapis mine in
northeastern Badakhshan Province a white coup — easy and bloodless.
Perhaps, but the seizure has become a lesson in how the lack of
accountability and rule of law in Afghanistan can turn bounty into ruin.

Riding waves of excitement after a 2010 report by the United States military
that Afghanistan's mineral wealth could be worth as much as $1 trillion, the
Lajwardeen Mining Company won a 15-year contract in 2013 to extract lapis
lazuli in Badakhshan. For thousands of years, Afghanistan has been one of the
chief sources of lapis lazuli, a prized blue gemstone associated with love and
purity and admired by poets as well as jewelers.

Valued at about $125 million a year in 2014, the lapis trade had the potential
to be worth at least double that, and Lajwardeen, owned by an Afghan family
in the import-export business for three generations, saw a great opportunity.

Yet within 21 days of officially beginning its work, the company lost the mine
to a local militia supported by the Afghan political elite.

In the two years since, according to interviews with company employees,
Afghan officials and militia commanders, the government has done little to
restore the mine to the company. Lapis is still being mined, with the rent split
between the militia and the Taliban, who have established a strong foothold in
a province long resistant to them.

With the plunge in global commodity prices deflating some of the enthusiasm
for Afghanistan's mineral wealth, the initial excitement has faded into broader
— and, among Afghans, all-too-familiar — concerns over mismanagement,
impunity and corruption. The country has failed to make even the most basic
legal and regulatory changes, and even President Ashraf Ghani recently
expressed fear that "we are faced with the curse of natural resources."

Javed Noorani, an Afghan analyst who has written extensively about
extractive industries, said: "We have to define a vision for our mines and how
we go about extracting each. In the current reality, where do we have
security control and can provide the most basic governance and oversight?"

But Mr. Ghani's government, which promised a more judicious approach to
the mines, seems to be perpetuating the old way of doing business. The
Afghan National Security Council, over which Mr. Ghani presides, ordered the
termination of the Lajwardeen contract and moved to reopen the bidding. The
council also proposed bringing the militia into the government framework.
Such a change would set a strange precedent: failing to protect a contractor
from a seizure of assets and then legalizing the takeover.

The decision to cancel the contract was made in November 2014, the National
Security Council said in a statement, because the contractor's progress had
not met the terms of the agreement and the mine was being used by
"irresponsible armed men."

While other parts of the National Security Council's decision, such as
dispatching forces to protect the mine, have not been carried out, the
government said it still considered the contract annulled because Lajwardeen
had not followed up on its appeal in the courts. The company, though, says it
is still pursuing the case.

Expansion of the mineral industry is essential to cultivating Afghanistan's
economic growth and weaning the country from foreign aid, said Stephen
Carter, the leader of the Afghanistan campaign at Global Witness, an
organization that investigates corruption and environmental degradation in
the exploitation of natural resources.

"What the lapis mines of Badakhshan show better than almost any other
example is that the realistic expectation is that they are going to do precisely
the opposite — that they are going to be a source of conflict and corruption
and actually possibly fuel a long-term, chronic resource-based conflict," Mr.
Carter said. "So what should be a treasure is actually a poison for
Afghanistan."

A new Global Witness report explains how interests of the Taliban and the
political elite align to keep the government weak and the resources in the
hands of an unlawful few. The report also shows how Lajwardeen was
essentially caught in a larger rivalry between two local strongmen.

For much of this century, the mine was controlled by local strongmen
including Zalmai Mujadidi, a member of Parliament who made his brother the
leader of the security force protecting the mine. When Lajwardeen (the word
is a Persian description of lapis) won the contract in 2013, the government
struggled to hand over the mine as rival factions vied for control.

Company executives agreed to a compromise: They gave illegal miners a few
months to take as much of the stone as they could. The executives also
offered them a chance to buy shares in the company once it began
operations.

But the company's perceived closeness to Mr. Mujadidi set off a vicious
backlash. While saying Mr. Mujadidi had not been awarded shares, company
officials acknowledged that they had enlisted the support of powerful people
like him, especially since his brother's guards essentially controlled the mine;
such was the reality of doing business in Badakhshan.

In January 2014, Abdul Malik, a militia commander and a longtime rival to Mr.
Mujadidi, spread rumors that the Taliban were about to take the mine.
Instead, fighters loyal to him seized it.

"There was no Taliban in the district at the time they took over the mine,"
said Noor Agha Nadery, who was then the district governor of Kuran wa
Munjan, where the mine is situated. "The truth of the matter is that the mine
was taken over with the help of senior officials in Kabul and Badakhshan, who
are still trying to keep the mine in the hands of Malik."

Imamuddin, one of Mr. Malik's commanders, who helped take the mine but
has since had a falling-out with him, said, "There were no Taliban in the
district." That rumor, said Imamuddin, who like many Afghans uses only one
name, "was spread by Malik himself."

Mr. Malik, who believes in restoring local ownership of the mine, has said he
led a popular uprising against outsiders exploiting it.

Mr. Malik's militia made about $18 million in 2014 and $12 million in 2015
from renting the mine to local extractors and collecting tolls on the roads, the
Global Witness report said. As the Taliban have encroached on the area, he
has been forced to pay them. He split the income 50-50 in the first four
months of 2016, the Global Witness report said, meaning the Taliban would
get an estimated $6 million for the full year.

Global Witness lists Bismillah Khan Mohammadi, who was Afghanistan's
defense minister at the time of the takeover, as one of Mr. Malik's supporters.
A longtime guerrilla commander with the anti-Taliban Northern Alliance, a
movement that for decades tapped into the lapis trade to pay for its
campaigns, Mr. Mohammadi knew the value of the mine.

If the allegation is true, it shows just how complex and counterintuitive war at
the local level can be. It would mean that a former anti-Taliban political figure
tasked with defending against the insurgency became involved in a scheme
that brought the Taliban huge profits, making them a force in a province that
had long resisted them.

Mr. Mohammadi was traveling and could not be reached for comment, said
Shafiq Salangi, an aide.

"Minister Bismillah Khan was not supporting Malik; he did not support him in
getting the lapis mines in Badakhshan," Mr. Salangi said. "This claim does not
have logical grounds. We reject this claim."

But local commanders said Mr. Mohammadi had been one of the first people
Mr. Malik contacted after seizing the mine.

"Commander Malik called Bismillah Mohammadi to assure him that the mine
was taken over, and that no one had been killed and that he would follow
orders from him," Imamuddin said.

Lajwardeen hopes to reclaim the mine one day. In the meantime, it is buying
lapis — from Mr. Malik's militia.

[Source: By Mujib Mashal, International New York Times, Kabul, 05Jun16]

This document has been published on 08Jun16 by the Equipo Nizkor and Derechos Human Rights. In accordance with
Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a
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